Under the Private Works Act, suppliers are included in the list of persons that have a privilege on an immovable to secure “the price of movables sold to the owner that become component parts of the immovable, or are consumed at the site of the immovable, or are consumed in machinery or equipment used at the site of the immovable.”
How do Suppliers secure their Rights?
Louisiana Revised Statute 9:4802 provides that supplies sold to the contractor that become component parts of the immovable, or are consumed at the site of the immovable, or are consumed in machinery or equipment used at the site of the immovable have a claim against both the owner and a claim against the contractor to secure payment. The claims against the owner shall be secured by a privilege on the immovable on which the work is performed. It is important to note that claims against the owner and contractor are not a replacement, but in addition to, other contractual or legal rights that the claimants have for payment (i.e. breach of contract/open account lawsuit).
Further, for the supplier’s privilege to arise, the supplier must deliver a notice of nonpayment to the owner at least ten days before filing a statement of his claim and privilege. The notice shall be served by registered or certified mail, return receipt requested, and shall contain:
- The name and address of the seller of movables
- A general description of the materials provided
- A description sufficient to identify the immovable property
- A written statement of the seller’s lien rights for the total amount owed, plus interest and recording fees.
Notice Requirements for Suppliers
If the seller of movables has not been paid by the subcontractor and has not sent a notice of nonpayment to the general contractor and the owner, then the seller shall lose his right to file a privilege or lien on the immovable property. The Notice of Nonpayment must be sent via certified mail to the last known address of the general contractor and owner and deposited in the U.S. Mail on or before seventy-five days from the last day of the month in which the material was delivered or no later than the statutory lien period.
Owners and Contractors
For purposes of securing privileges, owners are defined as any person having any person having the right to use or enjoyment of an immovable or having an interest therein, however, claims are limited to owner or owners who have contracted with the contractor or to the owner who agreed in writing to the price and work of the contract. They shall each be held solidarily liable.
Contractors are defined as one who contracts with an owner to perform all or part of a work and a general contractor is one who contracts to perform all or substantially all of a work.
Form Requirements for Statement of Claim or Privilege
(1) Shall be in writing.
(2) Shall be signed by the person asserting the same or his representative.
(3) Shall reasonably identify the immovable with respect to which the work was performed or movables or services were supplied or rendered and the owner thereof.
(4) Shall set forth the amount and nature of the obligation giving rise to the claim or privilege and reasonably itemize the elements comprising it including the person for whom or to whom the contract was performed, material supplied, or services rendered. The provisions of this Paragraph shall not require a claimant to attach copies of unpaid invoices unless the statement of claim or privilege specifically states that the invoices are attached.
Place For Filing
All notices of contract, notice of termination, statement of a claim or privilege, or notice of pendency of action must be filed with the recorder of mortgages of the parish in which the work is to be performed. Important to note a property description which contains the lot and/or square and/or subdivision or township and range will meet the requirements for adequate property description.
Amount Secured By Lien
The lien secures the amount owed from the obligation performed, interest due thereon, and any fees paid for filing the statement.
Ranking of Privilege
Unfortunately sellers of movables’ privileges rank below municipalities, taxes, and laborers. They are ranked together with subcontractors and lessors of movables and above privileges of general contractors.
Preserving A Privilege
If a Notice of Contract is filed, the persons to whom a claim of privilege is granted shall within thirty days after the filing of a notice of termination of the work:
- File a Statement of their claims or privilege
- Deliver to the owner a copy of the statement of claim or privilege (however, if the address of the owner is not given in the Notice of Contract, the claimant is not required to deliver a copy of his statement to the owner.
If no Notice of Contract is filed, a seller of movables shall file a statement of their claim within sixty (60) days after:
- The filing of a notice of termination of the work; or
- The substantial completion or abandonment of the work, if a notice of termination is not filed.
A seller of movables sold for use or consumption in work on an immovable for residential purposes, if not notice is filed, shall file a claim within seventy days after: filing of a notice of termination, substantial completion or abandonment if no notice of termination.
A work is substantially complete when:
- The last work is performed on, or materials are delivered to the site of the immovable or to that portion or area with respect to which a notice of partial termination is filed; OR
- The owner accepts the improvement, possesses or occupies the immovable, or that portion or area of the immovable with respect to which a notice of partial termination is filed, although minor or inconsequential matters remain to be finished or minor defects or errors in the work are to be remedied.
If a person does not have a direct contractual relationship with the general contractor, they must first record the claim and give written notice to the contractor within thirty days of recordation of notice of termination of work.
Extinguishment of Claims and Privileges
Claims against owners and contractors are extinguished if the claimant does not preserve it as required by LA R.S. 9:4822 (discussed above) or the claimant or holder of the privilege does not institute an action against the owner for the enforcement of the claim within one year after filing the statement of claim or privilege to preserve it.